Presentation to the Portfolio Committee 05 April 2005 The Allocation of Long Term Commercial Fishing Rights.

Presentation to the Portfolio Presentation to the Portfolio CommitteeCommittee

05 April 200505 April 2005

The Allocation of Long Term Commercial

Fishing Rights

Background: The Allocation of Medium Background: The Allocation of Medium Term Fishing Rights: 2001 to 2005Term Fishing Rights: 2001 to 2005

• First ever multiple year rights allocation in South African First ever multiple year rights allocation in South African commercial fishingcommercial fishing

• Purpose and ObjectivesPurpose and Objectives– Effect further transformation of the industryEffect further transformation of the industry– Establish economic stability in the industry to Establish economic stability in the industry to

stimulate job creation and further investmentstimulate job creation and further investment– Sustain or reduce fishing effort to ensure sustainable Sustain or reduce fishing effort to ensure sustainable

resource managementresource management• Challenges (1994)Challenges (1994)

– 1% of fisheries black owned ; 0% black managed1% of fisheries black owned ; 0% black managed– Transformation to be effected with less fishTransformation to be effected with less fish– 400 right holders in total400 right holders in total

• ResultsResults– 66% of all fishing rights are held by blacks or black 66% of all fishing rights are held by blacks or black

controlled entities (50%+1);controlled entities (50%+1);– 70% of all fishing rights are held by SME’s70% of all fishing rights are held by SME’s– 3930 commercial rights are currently being exploited3930 commercial rights are currently being exploited– South African hake fishery only hake fishery in the South African hake fishery only hake fishery in the

world to be MSC certifiedworld to be MSC certified– All our fisheries are well managed but currently All our fisheries are well managed but currently

maximally exploited, save for some line fish stocks maximally exploited, save for some line fish stocks and abalone, which are near collapseand abalone, which are near collapse

South Africa’s Fishing Policy: 2005 and South Africa’s Fishing Policy: 2005 and BeyondBeyond

• Broad Based Black Broad Based Black Economic Economic Empowerment Empowerment

• Biology of the target Biology of the target resourceresource

• Ecology in which target Ecology in which target resource is foundresource is found

• Economic and Social Economic and Social DevelopmentDevelopment

• Black and female equity ownership;Black and female equity ownership;

• Black and female control of Black and female control of management;management;

• Compliance with Employment Equity and Compliance with Employment Equity and Skills Legislation;Skills Legislation;

• Worker empowerment (share schemes);Worker empowerment (share schemes);

• CSI (1% and more to be considered);CSI (1% and more to be considered);

• Affirmative ProcurementAffirmative Procurement

• Managed through the setting on an Managed through the setting on an annual basis of Total Allowable Catch annual basis of Total Allowable Catch and/or Total Applied Effort limitationsand/or Total Applied Effort limitations

• The Ecosystems Approach to Fisheries The Ecosystems Approach to Fisheries (EAF) Management is an international (EAF) Management is an international obligation determined at WSSD with a obligation determined at WSSD with a deadline of 2010deadline of 2010

• Fisheries is an important food source. It Fisheries is an important food source. It also provides important jobs and also provides important jobs and livelihoods for thousands along our coastlivelihoods for thousands along our coast

Intervening in the 2Intervening in the 2ndnd Economy and Economy and Growing the 1Growing the 1stst Economy Economy

• The 2The 2ndnd Economy Interventions Economy Interventions Allocating Long Term Rights and access to Allocating Long Term Rights and access to

capitalcapital Geographic JusticeGeographic Justice ““Facilitating Access” (fees; application Facilitating Access” (fees; application

forms; language – see further below);forms; language – see further below); Allocating inshore resources to local fishers Allocating inshore resources to local fishers

not large companiesnot large companies Neutralising monopolies in the small Neutralising monopolies in the small

fisheries in particularfisheries in particular Researching new fisheriesResearching new fisheries

• Growing the 1Growing the 1stst Economy Economy Allocating rights within a legally sustainable Allocating rights within a legally sustainable

frameworkframework Supporting investment in infrastructure and Supporting investment in infrastructure and

rewarding value adding and job creationrewarding value adding and job creation Rewarding adherence to BEE and adherence Rewarding adherence to BEE and adherence

to equity and skills legislationto equity and skills legislation Identifying and eliminating frontingIdentifying and eliminating fronting

Fishing: 1% of GDP;

Coastal Resources: 30% of GDP

What Informs our Policies?What Informs our Policies?• South African Law (Statute and Case Law)South African Law (Statute and Case Law)

Section 24 of the ConstitutionSection 24 of the Constitution Broad Based Black Economic Empowerment Act and Codes of Broad Based Black Economic Empowerment Act and Codes of

PracticePractice Section 2 of the MLRA;Section 2 of the MLRA; High Court, SCA and Constitutional Court Judgments (48 fisheries High Court, SCA and Constitutional Court Judgments (48 fisheries

cases during 2002-2004)cases during 2002-2004)

• International Law and Regional and International ObligationsInternational Law and Regional and International Obligations United Nations (in particular the FAO)United Nations (in particular the FAO) Regional Fishery Management OrganisationsRegional Fishery Management Organisations

• Learnings, Izimbizo, and ad hoc ConsultationsLearnings, Izimbizo, and ad hoc Consultations Learnings from medium term processLearnings from medium term process Comments and Criticisms from IzimbizoComments and Criticisms from Izimbizo

• State of the Nation Addresses (2004 and 2005), Ministerial State of the Nation Addresses (2004 and 2005), Ministerial Budget Votes and InterviewsBudget Votes and Interviews

• January 8January 8thth Statement by the African National Congress Statement by the African National Congress ““The People Shall Govern”The People Shall Govern” ““The People Shall Share in the Wealth of the Country”The People Shall Share in the Wealth of the Country”

Policy StructurePolicy Structure• General Fisheries Policy (clustered approach to fisheries management)General Fisheries Policy (clustered approach to fisheries management)

• 19 Fishery Specific Policies19 Fishery Specific Policies

Cluster ACluster A

Hake Deep Sea TrawlHake Deep Sea Trawl

Hake Inshore TrawlHake Inshore Trawl

Horse MackerelHorse Mackerel

Small PelagicsSmall Pelagics

Patagonian ToothfishPatagonian Toothfish

South Coast Rock LobsterSouth Coast Rock Lobster

KZN Prawn TrawlKZN Prawn Trawl

Cluster BCluster B

WCRL (Off Shore)WCRL (Off Shore)

Hake LonglineHake Longline

SquidSquid

Tuna HandlineTuna Handline

SeaweedSeaweed

Shark Long Line (Demersal)Shark Long Line (Demersal)

Cluster CCluster C

Handline HakeHandline Hake

WCRL (Near Shore)WCRL (Near Shore)

Cluster DCluster D

OystersOysters

White MusselsWhite Mussels

Beach Seine NetsBeach Seine Nets

KZN Beach Seine (Pilchards)KZN Beach Seine (Pilchards)

Hake Deep-Sea TrawlHake Deep-Sea Trawl

*Fishery worth R1,4 billion annually*Fishery worth R1,4 billion annually*Employs 8800 persons directly*Employs 8800 persons directly*Asset value estimated at R700 million*Asset value estimated at R700 million

Hake Deep-Sea Trawl PolicyHake Deep-Sea Trawl Policy

92%

75%

0%

20%

40%

60%

80%

100%

1992 2004

Percentage TAC Held by 5 Largest Companies

50 336

5300045000

0

10000

20000

30000

40000

50000

60000

Largest and Smallest Allocations

19922004

Black Ownership and Management in 2002

HDP74%

Non-HDP26%

TAC held by black owned companiesHDP25%

Non-HDP75%

Hake Deep-Sea Trawl Policy Hake Deep-Sea Trawl Policy (cont…)(cont…)

• Over-all Sectoral ObjectivesOver-all Sectoral Objectives– Improve the transformation profileImprove the transformation profile– Ensure the long term sustainable utilisation of hake stocksEnsure the long term sustainable utilisation of hake stocks– Manage all known impacts on the marine ecosystem affected Manage all known impacts on the marine ecosystem affected

by trawling, including preventing and reducing by-catchesby trawling, including preventing and reducing by-catches– Redistribute TAC rewarding BEE entities & SME’sRedistribute TAC rewarding BEE entities & SME’s– Exclude poor performersExclude poor performers– Job creationJob creation– Economic and environmental sustainabilityEconomic and environmental sustainability

• Duration Duration – 15 years15 years

• How do the quantum pools work?How do the quantum pools work?– 10% for SME10% for SME– 10% for Transformation10% for Transformation– 20% for Performance20% for Performance

SeaweedSeaweed

*Employs 1700 persons directly*Employs 1700 persons directly*Fishery worth approximately R6 million annually*Fishery worth approximately R6 million annually

Seaweed PolicySeaweed Policy

Black Ownership and Management in 2002

HDP43%

Non-HDP57%

SME Right Holders

SME50%

Non-SME50%

Seaweed Policy (cont…)Seaweed Policy (cont…)

• Over-all Sectoral ObjectivesOver-all Sectoral Objectives– Improve the transformation profileImprove the transformation profile– Value adding to seaweed harvestedValue adding to seaweed harvested– Increase the number of participantsIncrease the number of participants– Encourage right holders who do not engage in seaweed Encourage right holders who do not engage in seaweed

beneficiation to instead join with local communities in beneficiation to instead join with local communities in application for seaweed harvesting rightsapplication for seaweed harvesting rights

– Economic viability of environmental sustainability of the fisheryEconomic viability of environmental sustainability of the fishery

• DurationDuration – 10 years10 years

• New EntrantsNew Entrants– Applications from new entrants are encouragedApplications from new entrants are encouraged

Hake Long LineHake Long Line

*Employs 6800 persons directly*Employs 6800 persons directly*Fishery worth approximately R130 million *Fishery worth approximately R130 million

annuallyannually* Asset value estimated at R750 million* Asset value estimated at R750 million

Hake Long Line PolicyHake Long Line Policy

Black Ownership and Management in 2002

Non-HDP10%

HDP90%

Approximate Percentage of SME participants in 2002

Non-SME20%

SME80%

Hake Long Line Policy (cont…)Hake Long Line Policy (cont…)

• Over-all Sectoral ObjectivesOver-all Sectoral Objectives– Maintain or improve the transformation profileMaintain or improve the transformation profile– Encourage investment in vessel and processing and Encourage investment in vessel and processing and

marketing infrastructure, and jobsmarketing infrastructure, and jobs– Mitigate against avoidable by-catch and to eliminate Mitigate against avoidable by-catch and to eliminate

bird strikesbird strikes– Facilitate research on impact of long lining on hake Facilitate research on impact of long lining on hake

stocksstocks– Affirm applicants whose registered place of business is Affirm applicants whose registered place of business is

in the Eastern Capein the Eastern Cape– Economic viability of environmental sustainability of Economic viability of environmental sustainability of

the fisherythe fishery

• Duration Duration – 15 years15 years

How are Fishing Rights Allocated? How are Fishing Rights Allocated?

Step 1: ConsultationStep 1: Consultation

•Draft fisheries policies are drafted and Draft fisheries policies are drafted and gazettedgazetted

•Consultation with interested and affected Consultation with interested and affected parties (best practice as it combines both parties (best practice as it combines both notice and comment and public inquiry)notice and comment and public inquiry)

•Receipt comment and amend policies Receipt comment and amend policies

Step 3: Verification, Evaluation and Step 3: Verification, Evaluation and Decision-MakingDecision-Making

•Every application receipted is Every application receipted is downloaded onto an electronic database; downloaded onto an electronic database; information is verified and separate information is verified and separate databases established for vessels, databases established for vessels, ownership etcownership etc

•A group of independent legal advisers A group of independent legal advisers then evaluate each application in terms then evaluate each application in terms of criteria and weighting determined by of criteria and weighting determined by the decision-maker and is overseen by the decision-maker and is overseen by the DMthe DM

•Decisions taken by decision-makerDecisions taken by decision-maker

Step 2: Invitation and ReceiptingStep 2: Invitation and Receipting

•Each cluster of fisheries is invited to apply Each cluster of fisheries is invited to apply on a staggered basison a staggered basis

•Receipting of some 5000 anticipated Receipting of some 5000 anticipated applications will be both central and applications will be both central and regional and overseen by Deloitteregional and overseen by Deloitte

Step 4: AppealsStep 4: Appeals

•Once notified by DM, every applicant Once notified by DM, every applicant may appeal to the Minister within 30 may appeal to the Minister within 30 daysdays

•For every appeal, the Department For every appeal, the Department drafts a report (2300 in 2002/2003)drafts a report (2300 in 2002/2003)

•Minister takes decisions based on Minister takes decisions based on appeal and report.appeal and report.

How are decisions taken?How are decisions taken?

• All fishing rights allocation processes are All fishing rights allocation processes are polycentric and criteria based.polycentric and criteria based.

• Once all applications are receipted and Once all applications are receipted and databases analysed, weighting and databases analysed, weighting and detailed criteria are designed to meet detailed criteria are designed to meet objectives.objectives.

• The criteria:The criteria:• Exclusionary criteria: (improper lodgements, material Exclusionary criteria: (improper lodgements, material

defects, essential requirements)defects, essential requirements)• Balancing Criteria (where must the line be drawn?)Balancing Criteria (where must the line be drawn?)• Tie-Breaking criteriaTie-Breaking criteria• Quantum/Effort CriteriaQuantum/Effort Criteria

Checks and Balances: Process Checks and Balances: Process Security and IntegritySecurity and Integrity

Allocating fishing rights worth R70 Allocating fishing rights worth R70 billionbillion

• Process security and integrityProcess security and integrity• NIA scrutiny of officesNIA scrutiny of offices

• Forensic Auditing and Verification: Internally and Forensic Auditing and Verification: Internally and ExternallyExternally

• Deloitte Forensics (Pty) LtdDeloitte Forensics (Pty) Ltd

• Independent Project ManagersIndependent Project Managers• The Resolve Group (Pty) LtdThe Resolve Group (Pty) Ltd

• Independent Legal AdvisersIndependent Legal Advisers• Professor Halton CheadleProfessor Halton Cheadle• Advocate Johan de WaalAdvocate Johan de Waal

Beyond Fishing AllocationsBeyond Fishing Allocations

• Investing in 12 new fisheries (3 in 2004/2005);Investing in 12 new fisheries (3 in 2004/2005);• Investing further in Aquaculture to reduce Investing further in Aquaculture to reduce

pressures on capture fisheries;pressures on capture fisheries;• Investigating alternative sustainable livelihoods Investigating alternative sustainable livelihoods

such as facilitating further economic development such as facilitating further economic development in fishing harbours;in fishing harbours;

• Expanding access to non-consumptive tourism Expanding access to non-consumptive tourism based activities such as SCUBA diving, boat based based activities such as SCUBA diving, boat based whale watching and white shark cage divingwhale watching and white shark cage diving